Camping World Inc. remains “very encouraged” with the initial performance of the company’s re-opened Gander Outdoors locations, although officials admitted that some stores are opening later than initially planned because of the complexities involved in opening so many stores.

“We’ve opened up 42 new Gander locations, which admittedly have opened a little later than I anticipated,” said Marcus Lemonis, chairman and CEO of Camping World on a conference call with analysts. “Given the number of stores we’re opening in a relatively short period of time and the fact that we are completely rebuilding the business, the inventory and the staff from scratch, there are challenges on several fronts, including our IT infrastructure, inventory management and distribution systems.”

As a result, Lemonis said he made the decision to slow down the opening process to ensure the stores are opening optimally. Lemonis added, “You only get one chance to make a first impression with the customer and this was way too important to me to rush it. Despite some of the logistical challenges and slowed opening pace, we are extremely excited about what the team has accomplished.”

Lemonis said Camping World will continue with its plan to open about 70 Gander Outdoors locations by mid-to-end summer.

“The only ones that will be delayed are the various ones where we are building full dealerships in all facilities, so there’s a retrofit involved,” said Lemonis. “Augusta, Georgia; Marion, Illinois; Huber Heights, Ohio, just an example of some markets where there were previous Gander stores. We acquired the property. We’re now doing a full conversion and acquiring additional land.”

He added, “Going forward, it is my goal whether it’s Wichita, Kansas or Fort Pierce or right outside of Chicago, any market that we open, we are trying to open up with a 360-degree outdoor lifestyle center without adding a lot of costs. So almost the same amount of land that we used to historically have, but adding a 30,000-square-foot, industrial, commercial-type box to the facility. And so that requires a little more planning, but our goal obviously is to hit the stride of the Gander selling season in the fall/winter. And so we expect to get them all opened by the end of the year for sure.”

Camping World about a year ago acquired the lease rights to many of the former Gander Mountain locations in bankruptcy proceedings and has been re-opening the locations as Gander Outdoors since the year’s start.

Sales for Gander Outdoors surpassed $25 million the quarter. The stores have added 40,000 new members of Good Sam, the company’s membership program that includes credit card services, warranty insurance, repair and other aftermarket services. Gander Outdoors has also added 4,400 new Good Sam credit card holders. Over 3,000 employees have been hired to work the re-opened locations.

“We negotiated and created business relationships with over 600 vendors and created over 250,000 new SKUs in our Oracle system,” added Lemonis. A distribution center that had shipped over 5 million pieces of product was reopened and a new point-of-sale system and website was launched.”

Said Lemonis, “All things considered, we are very encouraged with the initial performance of these stores and we’re very excited about the early conversion rates we are seeing in our Good Sam Club and our credit card program, which are running better than 12 percent for the Club and 2.5 percent for the credit card. Momentum in the stores continues to build.”

Lemonis added, “While the unseasonably cold weather likely, probably, most definitely had an impact on our Gander Outdoors business, I could not be more proud of what the Gander team has accomplished and I like the way the business is taking shape.”

Camping World also revealed plans to rebrand the NASCAR Camping World Truck Series to the NASCAR Gander Outdoors Truck Series starting with the 2019 season. Official rights status were also provided to TheHouse.com, Overton’s and Uncle Dan’s under the new NASCAR deal.

Camping World had been the title sponsor for the last 15 years. Lemonis said he expects NASCAR fans will “likely line up even more” to embrace Gander Outdoors and its other outdoor lifestyle banners.

Camping World also acquired Overton’s as part of the Gander Mountain bankruptcy. Since then, Camping World has also acquired TheHouse.com, Uncle Dan’s, W82, Erehwon Mountain Outfitters and most recently, Rock/Creek Outfitters.

Collectively, Camping World’s recently acquired outdoor and active sports businesses generated over $39 million in the first quarter. Said Lemonis, “While it is still a relatively small part of our overall business, these businesses are performing nicely and we are seeing good growth both online and in stores.”

The CEO again reiterated the strong relationship between Camping World’s core RV business and a wide array of outdoor recreation activities represented by its newer businesses.

“There is no question that consumers today lead very active lifestyles and they are interested in a variety of outdoor-related activities. Outdoor living is not just about sitting on your patio and cooking on the grill. It’s about going places and doing things like camping, boating, fishing, hunting, biking, tailgating,” Lemonis said. “Today’s smaller and lighter RVs are the ultimate mobile experience that give consumers the ability to go and do quite frankly just about anything. And we see a significant opportunity to continue broadening and diversifying our business with the acquisition of our outdoor and active sports businesses over the past year and the opening of new Supercenter locations.”

Outlining the strategy behind the acquisitions of a number of outdoor and active sports businesses, Lemonis said the company is “building a 360-degree omni-channel business for outdoor and active sports enthusiasts.”

He elaborated, “The overall strategy is akin to a four-legged stool; picture it in your mind. With Camping World’s omni-channel RV business as the anchor leg driving market share and enhanced customer experience. Overton’s is the second leg with its omni-channel approach to growing and leading the marine and fishing sector. Gander Outdoors is the third leg with its omni-channel approach targeting outdoor enthusiasts with their hunting, fishing, marine and active sports needs. And the specialty outdoor group as the last leg serving outdoor enthusiasts with items related to hiking, kayaking, bag packing, camping, skating, snowboarding and a ton more. The four legs of this omni-channel stool are supported by and held together by our company’s most important asset, the Good Sam brand, in the entire portfolio of Good Sam products and services.”

Lemonis said the goal is not only to sell products, but grow the company’s customer file, expand the base of Good Sam Club members and then cross-sell a broad array of products and services into a growing base of customers and Good Sam Club members. He added, “When a new member joins the club, we’re able to build the customer profile that assists us in selling other high-margin products and services, but only things that they need. That has always been our business model and this continues to be our focus as we broaden into wider outdoor lifestyle markets.”

Sam Club counted membership in excess of 1.8 million members. The acquisitions are also providing new benefits and discounts available only to Good Sam Club members.

Companywide, sales rose 20.4 percent to $1.0 billion. Same store sales for the base of 120 Camping World locations that were open on March 31, 2018 and January 1, 2017 increased 3.9 percent

Net income fell 57.7 percent to $3.2 million, or 8 cents a share. Adjusted earnings increased 16.5 percent to $36.9 million, or 41 cents a share. Adjusted results largely exclude pre-opening costs for Gander Outdoors.

Adjusted EBITDA was essentially flat at $77.8 million versus $71.9 million a year ago. Gross margin increased 13 basis points to a record 28.7 percent.

SG&A expenses increased 39.7% to 245.1 million. The increase in SG&A expenses was primarily driven by the additional expenses associated with the 21 additional RV retail locations, 28 Gander Outdoors locations which included $19.7 million of pre-opening costs associated with the store openings, one Overton’s location, two TheHouse.com locations, two W82 locations, five Uncle Dan’s locations and four Erehwon Mountain Outfitter locations operated during the first quarter of 2018. As a percentage of total gross profit, SG&A expenses increased 1,077 basis points to 80.4% in the first quarter of 2018 from 69.7% in the first quarter of 2017.

Camping World reiterated the company’s outlook for the year. Revenue is projected in the $4.8 billion to $5 billion range and adjusted EBITDA in the $431 million to $441 million range. These estimates include approximately $400 million of revenue for the outdoor and active sports businesses and $34 million of pre-opening expenses for Gander Outdoors.

With the Gander Outdoors stores opening in the first half of the year and their peak selling season being the third and fourth quarters, Camping World expects Gander Outdoors stores to be a drag on the adjusted EBITDA in the first half of the year and accretive in the second half.

“We’re very excited about both the RV and the outdoor and active sports businesses and we believe 2018 could be an important transition year for Camping World Holdings. We believe the fundamentals across the RV industry remain very strong and we continue to plan our business around a mid-single digit increase in same-store sales,” said Lemonis. “The unprecedented weather throughout much of the country in March and April likely impacted the early part of our RV selling season, but they are still a long way to go and we feel very good about the early May trends.”

Photo courtesy Gander Outdoors